501(c)(3) Nonprofit Organizations

What unemployment solutions are available to nonprofit organizations?

Federal law allows 501(c)(3) nonprofit organizations the option to reimburse the state for unemployment benefits paid to their separated employees instead of paying State Unemployment Insurance (SUI) tax.

Nonprofit employers often overpay within the tax system because a portion of their taxes subsidizes other employers. Therefore, becoming a “reimbursing” employer could be financially beneficial. With limited information we can provide indications to determine if an employer is paying a fair amount of SUI tax or alternatively, if they are overpaying and thereby a good candidate for our program.

With our first-of-kind admitted insurance program, reimbursing employers can transfer their unemployment reimbursement risk to an "A+" (Superior) A.M. Best-rated insurance carrier. By transferring risk to a fiscally strong insurance company, we can help nonprofits save money and provide financial security, which allows them to allocate their money toward their mission.

This program is available for nonprofit organizations that have a gross annual payroll of at least $1 million and are a registered 501(c)(3) organization. Eligible employers can potentially save 30% or more each year versus the taxpaying alternative if their SUI tax payments exceed the amount of actual benefits paid to separated employers. The following are actual savings for some of our clients.

What coverage options are available?

The Unemployment Contractual Liability (UCL) policy is a proprietary form that indemnifies the employer for their obligation to reimburse the state for unemployment benefits paid to separated employees, subject to meeting the terms and conditions of the policy. Great American will pay the states for benefits covered under the policy taking the administrative burden off the employer. This admitted program is available in Washington D.C. and all states except NY.*

• First Dollar Insurance – Coverage attaches immediately and provides greater budget certainty for covered benefits.
• Stop-Loss Insurance – Coverage attaches excess of the Self-Insured Retention (SIR). The SIR is negotiable to meet the varying needs and risk tolerance of each insured.

Policy Limits are negotiable and customizable for each employer. Additionally, an Experience Refund Endorsement is available on First Dollar coverage meaning insureds with a favorable loss experience will have their calculated net profit applied to future premium payments. If the insured does not renew, the company will issue a refund for the amount due.

*In New York, the admitted program is available as a Reimbursing Employer Unemployment Bond. The Reimbursing Employer Unemployment Bond is available on a Stop-Loss basis only, where coverage attaches excess of a Loss Reserve Limit that acts like a SIR. The bond assures reimbursement to the state when eligible unemployment benefits exceed the Loss Reserve Limit, subject to meeting its terms and conditions. The Loss Reserve Limit is unique to each employer to meet the varying needs and characteristics of our client. Great American will pay the state for all benefits taking the administrative burden off the employer.

What nonprofit unemployment services are available?

To help keep nonprofit organizations safe from needless unemployment costs, an unemployment insurance program needs to include claims administration and risk management services.

Our program includes:

• Professional Claims Administration, with claims management, hearing representation, unemployment cost management training and state reimbursement processing.
• Re-employment Services for separated employees, with group coaching, job positioning and job search training.
• State Unemployment Bonds when collateral is required by state law.
• Reserve Account Administration, for insureds who have Stop-Loss Insurance, which provides interest on invested funds.

Learn how an Unemployment Contractual Liability policy could help save you money.